Fundamentals of Business

Product focus

√ Product focus
In a product innovation approach, the company pursues product innovation, and then tries to develop a market for the product. Product innovation drives the process and marketing research is conducted primarily to ensure that a profitable market segment(s) exists for the innovation. The rationale is that customers may not know what options will be available to them in the future so we should not expect them to tell us what they will buy in the future. However, marketers can aggressively over-pursue product innovation and try to overcapitalize on a niche.

When pursuing a product innovation approach, marketers must ensure that they have a varied and multi tiered approach to product innovation. It is claimed that if Thomas Edison depended on marketing research he would have produced larger candles rather than inventing light bulbs. Many firms, such as research and development focused companies, successfully focus on product innovation. Other aspects.

A relatively new form of marketing uses the Internet and is called internet marketing or more generally e-marketing, affiliate marketing, desktop advertising or online marketing, in contrast to an electronic commerce firm, conducts its day to day business functions over the internet and/or other electronic networks such as electronic data interchange (EDI). Electronic business includes collaborating with distributors on sales promotions, interacting with and servicing the customers, and conducting joint research with business partners.

It typically tries to perfect the segmentation strategy used in traditional marketing. It targets its audience more precisely, and is sometimes called personalized marketing or one to one marketing.

Pricing goods
There are two ways to pricing,
. One is to make the product calculate the cost of making it, and add a percentage mark-up (the profit) to arrive at the price.
. The other is to make a judgment as to the price a product can be sold for in a market, and then to develop and make the product according to specifications the costs of which will give an acceptable profit when the product is sold in the market.
When formulating its policy, a company takes a view on how the prices of its products should compare with those of its competitors. It may pursue a low pricing policy in order to gain market share. It may opt for a high pricing policy in order to reinforce the sought after perception that its product is of better quality or is more prestigious than competing products. Or it may simply follow what its competitors do, cutting prices for its products when they do.

A new product may be introduced at a special low price. Companies will also look at a product's price sensitivity or price elasticity of demand (how much demand may be reduced by increases in price). They may decide to be flexible rather than rigid by, for example, giving their representatives discretion to vary the price for different customers.

For each market it may be necessary to adopt a different pricing policy, perhaps to follow a low- or middle price course in the home market but a high priced policy in certain foreign markets where the brand is perceived as being more prestigious or because the market will bear it.